U.S. tech shares drop after Chinese AI launch

Stock in American technology companies dropped on Monday as DeepSeek’s AI chatbot app became the top free app downloaded by iPhone users. The Chinese company launched its R1 model last week as a much more cost-effective alternative to OpenAI’s ChatGPT. Both apps are what’s called large language models, where the intelligence has been trained on a huge amount of text-based data. 

Third-party testing released Monday showed Deepseek-R1 performing as good as or better than OpenAI models. DeepSeek gained so much popularity it was forced to temporarily pause new user registration on Monday amid a wave of cyber attacks, according to a report by Reuters.

So what’s the big deal about another AI model launching? DeepSeek’s sudden rise prompted questions about America’s status as a leader in artificial intelligence. DeepSeek products cost less to make and use less powerful computer chips, yet seem to perform comparably to more expensive U.S. products, according to reporting on the tech industry. Adviser to President Donald Trump Marc Andreessen characterized DeepSeek’s R1 model as the “Sputnik” of AI, referencing the satellite Russia launched in 1957 that ignited the Space Race. He said Deepseek has similarly jump-started an AI race by shocking the West with an adversary’s advanced technology, according to reporting by the BBC.

Dig deeper: Read Travis K. Kircher’s report on President Donald Trump announcing a $500 billion AI infrastructure project in the United States.